AFP/Colombo
Sri Lanka’s new government yesterday scrapped generous tax concessions for foreign-funded resorts and banned them from including casinos after opposition by the country’s influential Buddhist monks.
Prime minister Ranil Wickremesinghe said the government would pull with immediate effect tax breaks for three luxury resorts that had been given the green light to open in Colombo with high-end gambling houses.
“We will not allow casinos on their premises,” the premier told lawmakers.
The previous government led by Mahinda Rajapakse had introduced measures—including a 5% tax rate for the resorts—in a bid to turn the Sri Lankan capital into a gambling hotspot, despite resistance from Buddhist monks.
President Maithripala Sirisena, who swept to victory in January 8 elections backed by the country’s main party of monks, pledged to end the breaks during his campaign. Yesterday’s moves place a question mark over the future of Australian gambling mogul James Packer’s plans to build a $350mn luxury hotel with a casino.
The other two mega resorts are a $650mn development by local conglomerate John Keells Holdings, which has foreign shareholders, and a $300mn project by local businessman Dhammika Perera, who has sought overseas funding.
None of the proposed gambling operations have opened in Colombo yet, but several small, local, low-key casinos have been in operation for decades, exploiting legal loopholes.
Packer’s proposed 450-room Crown Sri Lanka resort—which once promised on its website to offer “world-class gaming facilities”—is yet to begin construction.
Government spokesman Rajitha Senaratne said the operations of existing local casinos would also be reviewed.
“We are told there are two or more casino licences in the country, but we want to see the legal basis of those operations,” Senaratne said. “We will review all this.”
Finance minister Ravi Karunanayake said he would give existing local casinos, thought to number about five, a deadline of mid April to pay a flat fee of 1bn rupees ($7.6mn) to remain in business.
Sri Lanka’s new government Thursday announced hefty taxes on top companies in a bid to raise revenue, accusing the previous regime of fudging the figures and leaving the economy in a “sad state”.
Finance minister Ravi Karunanayake also said prices of essential food items would be slashed to cut the cost of living for average Sri Lankans, as he unveiled his government’s supplementary budget.
Karunanayake said public debt had been hidden and growth artificially inflated by the regime of Mahinda Rajapakse, who was ousted after 10 years in elections this month on claims of corruption and cronyism.
“The officials and economic experts have looked into the figures and now the economics of deceit and falsehood had surfaced,” Karunanayake told parliament.
“The bad news is that economy is in a sad state, and the good news it is not beyond resurrection and is in safe and sound hands,” he said, pledging a transparent government.
Karunanayake announced a “super” tax of 25% on companies which earn annual net profit of more than 2bn rupees ($15.38mn), and a 1bn rupee ($7.56m) tax on Sri Lanka’s handful of local casinos.
He revealed tax cuts on a dozen essential food items including milk powder and bread, and granted a 10,000-rupee ($76) salary increase to more than 1.6mn public servants.
A “mansion” tax of 1mn rupees ($7,700) will also be imposed annually on owners of large homes, the minister said.
The new government last week reduced fuel by 20% and pledged further reductions, in populist measures ahead of parliamentary polls.
President Maithripala Sirisena has pledged to dissolve parliament in April, two years ahead of time, and call an election aimed at strengthening his hold on power.
Karunanayake said debt was 88.9% of GDP, sharply higher than the Sri Lankan central bank’s figure of 74.5% given before the change of government.
Sri Lanka reported more than 8% growth in the first two years after the end of a decades-long separatist war in 2009, and has recorded steady growth since then.
But Karunanayake branded those figures highly suspect, although he did not estimate what the actual figures were.
Karunanayake’s government has accused the former regime of stealing at least $5.38bn in 2013 alone by inflating costs of mega infrastructure projects.
Former strongman Rajapakse, who has also been accused of stacking his former regime with relatives, has denied such kickbacks.
Sri Lankan President Maithripala Sirisena (L) and Sri Lankan prime minister Ranil Wickremasinghe listen as a supplementary budget is presented to par
